Bandi Papanna vs Yenuga Narasa Reddy and Others

Horace Owen Compton Beasley, Kt., C.J.—This is an appeal from an order of the learned District Judge of Bellary. The appellant applied

u/s 41 of the Provincial Insolvency Act for discharge. The learned District Judge in his order sets out certain facts with regard to the appellant''s

conduct, before his insolvency and expresses his opinion that the appellant is a most dishonest person. His opinion is found on the report made by

the Official Receiver. He then refuses the discharge and annuls the adjudication. All the facts set out in the learned District Judge''s order relating to

the conduct of the appellant may be perfectly true but what has been overlooked by the learned'' District Judge is that on an application u/s 41 of

the Act the Court can do one of the three things vis., grant or refuse an absolute order of discharge;or suspend the operation of the order for a

specified time; or grant an order of discharge subject to any conditions with respect to any earnings or income which may afterwards become due

to the insolvent, or with respect to his after acquired property. There is nothing in that section which enables the Insolvency Court to annul the

adjudication. The sections which relate to the annulment of the adjudication of insolvency are Sections 35 and 43 of the Act. Section 35 enables

the Court, where, in its opinion, a debtor ought not to have been adjudged insolvent, or where it is proved to the satisfaction of the Court that the

debts of the insolvent have been paid in full, on the application of the debtor or of any other person interested, to annul adjudication. The Court

may also u/s 43, if the debtor does not appear on the day fixed for hearing his application for discharge, or if the debtor does not apply for

discharge within the period specified, annul1 the adjudication. None of these essentials appear to be present here. At any rate in an application u/s

41 there is certainly no power to order the annulment of the insolvency. It appears to us, however, that, upon the facts stated in the learned District

Judge''s order, an absolute order of discharge would not be justified. The insolvent''s liability to pay his unsecured creditors 8 annas in the Rupee is

found to be due to causes directly under his own control. If that is so, that is a reason for refusing to grant an absolute discharge. In my view, the

application for discharge ought to have been refused; but the lower court''s order annulling the adjudication must be set aside and instead the

application for discharge refused and it is accordingly refused. The proper course will be for an application to be put in for the annulment of the

adjudication under Sections 35 and 43 and, if the necessary facts are proved, the Court will be entitled to annul the adjudication. The appeal-is

allowed to this extent and without costs.

Cornish, J.

I agree.